USD Still in Range Trading

This chart of the US Dollar Index futures show that the US Dollar remains in a consolidation phase since about Thanksgiving 2007. Sometimes we tend to look at the USD in isolation, as a barometer only of the health of the US economy. However, we often overlook the conditions around the world that also affect capital flows into and out of a currency. For example, the value of the USD is affected by decisions by Mr. Jean-Claude Trichet and monetary policy of the ECB and the state of the economy in Europe. The value of the USD may also be impacted by geopolitical events, the price of oil, etc. There are so many variables that can affect its value, I have found that trying to predict currency prices can be very troublesome and expensive. This is why I do not trade based upon fundamentals alone. How much to weigh each variable, the possibility that other variables are affecting the markets that I may be unaware of, etc. can move the market in a different direction that what I have judged. I just go with the flow. When a new trend manifests itself, I'll take the trade.

In this chart, I am watching to see if the value of the USD Index futures remain above the 50-day moving average (light blue) and the Exponential Moving Average (changing from blue to red). These would indicate to me that a new bull trend for the USD has begun. Note that the 50-day moving average shows a slight upward tack in this chart, as does the EMA.